China: A Six-Month Update Of China's Fair Competition Review System

In June 2016, China's State Council issued its Opinions of
the State Council on Establishing a Fair Competition Review System
During the Development of Market-oriented Review System
("Opinions").1 The fair competition review system
("FCRS") that the Opinions contemplate is designed to
protect against the potential abuse of administrative power by
Chinese government agencies that could result in anti-competitive
effects. In other words, the FCRS is supposed to constrain
government activities from unduly influencing market competition,
consistent with the prohibition that China's Anti-Monopoly Law
places on such conduct.2

The Chinese government has been active in its efforts to
implement the FCRS. Those efforts can be classified into three
categories: (i) public education and awareness campaigns; (ii)
development of implementation regulations and mechanisms; and (iii)
actual FCRS reviews. Below, we highlight some of the progress in
these areas.

Public Education and Awareness Campaigns

The effort that the Chinese government has undertaken to
publicize the FCRS suggests the government is committed to the
system and intends to make it work. Indeed, the government was
ready to implement its communications plan about the Opinions very
soon after releasing them. In late June, the government issued
official interpretations of the necessity for, and feasibility of,
the FCRS.3 This included a prestigious scholar's discussions
about the fundamental status of competition policies, including a
discussion of the relationship between competition policies and
industrial policies, which is still hotly debated.4 Then, in July,
the Information Office of the State Council held a press conference
to formally introduce the Opinions.5 By early August, lectures on
the Opinions were included as part of a nationwide training program
on price regulation and anti-monopoly law enforcement.6

These efforts continued into the fall of this year. In October,
the Bureau of Price Supervision held FCRS training courses for the
major local price supervision and anti-monopoly agencies, pushing
the provincial governments to forward the Opinions to lower
government agencies or issue implementation opinions as soon as
possible. The intent behind these programs, among other things, was
to strengthen guidance to city and county level government
departments.7 In early November, training courses on
"Anti-monopoly law" were held in Guangzhou, which once
again introduced the FCRS to the public.8 Most recently, on
November 17, Zhang Handong, Director of the Bureau of Price
Supervision of NDRC, spoke before 350 bureau-level officials at the
National School of Administration regarding the FCRS.9 Local
governments are also actively engaged in relevant training and
publicizing of the FCRS.10

Development of Implementation Mechanisms and Regulations

To comply with the Opinions, all departments of the State
Council, and all provincial governments and the departments
thereof, must now conduct a fair competition review when
formulating policy measures. The four departments–National
Development and Reform Commission ("NDRC"); Legislative
Affairs Office of the State Council ("LAO"); Ministry of
Commerce ("MOFCOM"); and State Administration for
Industry and Commerce ("SAIC")–are responsible for
developing implementation mechanisms and regulations.

NDRC took the lead. On July 27, 2016, it issued a high-level
notice on internal work procedures, which provides:

Whichever of its subordinate bodies formulates a policy shall
be responsible for that policy's review, and shall draft
written conclusions before submitting the policy to NDRC along with
relevant documents;

When needed, departments and bureaus may seek opinions from the
Bureau of Price Supervision during the review process; and

Departments and bureaus shall submit conclusions on their
respective fair competition reviews to the Department of Legal
Affairs, together with relevant policies and measures, for legal
review.11

MOFCOM has developed similar internal procedures.12 The issuance
of these procedures is likely to guide other agencies in their
formation of internal procedures to implement the FCRS.

Local provincial governments, as well as some state-run
industries, also have responded to the Opinions by proposing
self-review requirements that are in accord with the FCRS.13 For
instance, the State Tobacco Monopoly Bureau, China Tobacco, issued
an opinion on August 17 that calls for the establishment of fair
competition reviews for the tobacco industry. It explicitly stated
that all levels of the tobacco monopoly bureaus, tobacco companies,
and other relevant entities shall conduct a fair competition review
and shall formulate regulations and other policy measures related
to market access, tendering and bidding, business conduct, and the
like.14

Despite all of this progress, the four departments of the State
Council recognize that there is still much work to do in order to
successfully implement the FCRS. Thus, the departments have
launched an assessment of their progress.15 Since mid-August 2016,
the NDRC, MOFCOM and SAIC have undertaken a nationwide review of
how local governments have implemented the Opinions; exchanged
thoughts with local government officials, industry associations,
and business representatives on the FCRS; studied competition in
certain local markets; and gathered recommendations and opinions on
the status of FCRS implementation.16

For instance, on September 29, NDRC Deputy Director Hu Zucai
held a symposium on the FCRS, where he heard recommendations and
opinions from various industry associations and enterprises on FCRS
implementation and how it has helped to promote fair competition.
Heads of the National Federation of Industry and Commerce, China
General Chamber of Commerce, China Association of Small and Medium
Enterprises, US-China Business Council, China European Chamber of
Commerce and other associations and Jingdong Group, Dell Group and
other enterprises, took part in that symposium.17

In addition, NDRC and other departments are gathering
information from counterparts in other countries to help implement
the FCRS. For example, in September, the Market and Price Research
Institute of the Academy of Macroeconomic Research and the UK
Prosperity Fund launched a project, Study on the Path to the
Implementation of FCRS.18 On September 7, the NDRC's Bureau of
Price Supervision and the German International Cooperation Agency
jointly organized an international seminar on FCRS in Beijing, at
which experts from China and other countries analyzed the
similarities and differences between the OECD competition
assessment system and the FCRS.19 In late October, the fifth
"China Competition Policy Forum" took place in Beijing.
There, Zhang Handong, Director of the Bureau of Price Supervision,
introduced China's FCRS and met with Renata Hesse, Acting
Assistant Attorney General of the Antitrust Division of the U.S
Department of Justice, U.S. FTC Commissioner Maureen Ohlhausen, and
Jenny Pratt, Senior Deputy Director of the Canada Competition
Bureau.20 Finally, in early November, NDRC welcomed a visit from
the Chairman of the Singapore Competition Commission during which
the participants discussed the FCRS.21

FCRS Reviews

Departments of the State Council have started to implement the
policies they have developed pursuant to the FCRS,22 and at least
one has undertaken a fair competition review. The Interim
Administrative Measures for the Business of Online Taxi Booking
Services (issued on July 20, 2016, effective as of November 1,
2016) ("Measures") is the first such example.

A draft of the Measures was released for public comment on
October 10, 2015. In June 2016, a traditional taxi service company,
Shanghai Da Zhong Taxi Company, sent letters to the Ministry of
Transport and the State Administration of Taxation, urging a fair
competition review of the draft Measures. Da Zhong mainly
complained that the online taxi booking service players did not
follow the same strict regulations applied to traditional taxi
service business and thus improperly lowered their service costs
and unfairly competed with traditional tax drivers; moreover,
online taxi booking service platform companies continued providing
high subsidies to customers and drivers so as to increase their
market shares, which constituted "selling services at prices
lower than costs for the purpose of pushing out their
competitors", violating the Anti-Unfair Competition Law.
Several other traditional taxi companies joined the request.
Compared with the draft Measures, the promulgated Measures
incorporated many changes in details about taxi booking service
platform providers, vehicles and drivers, and their conduct and
supervision of them. Although we are not aware of any official
report clarifying what changes in the promulgated version were made
as a result of the fair competition review, compared with the draft
Measures, the promulgated Measures more explicitly provide that
"[A]n Online Taxi Booking Service Platform Company shall not
impede fair market competition...and shall not commit price-related
illegal activities" (Art. 21 of the Measures), which Da Zhong
believed reflected its main concerns.23

Conclusion

It is still early, but the Chinese government and the four
departments of the State Council have made significant efforts in
the past six months to promote and implement the FCRS. These
efforts reflect a business environment in China that continues to
increase its focus on protecting fair competition.

9.See Bureau of Price Supervision and Inspection and
Anti-monopoly, Director Zhang Handong of Bureau of Price
Supervision Was Invited to Give a Report on Fair Competition Review
System at the National School of Administration, November, 18,
2016, available at http://www.sdpc.gov.cn/gzdt/201611/t20161118_827053.html.

14.Lu Yanjin, State Tobacco monopoly Administration and
China National Tobacco Corporation Issued Opinions on Establishing
Fair Competition Review System to Promote the Sustainable and
Healthy Development of the Industry, East Tobacco Newspaper,
available at: http://www.tobacco.gov.cn/html/30/3004/4934961_n.html.

17.See Bureau of Price Supervision and Inspection and
Anti-monopoly, Deputy Director Hu Zucai Held a Symposium on Fair
Competition Review System and Listened to the Recommendations from
Some Industry Associations and Enterprise, September 30, 2016,
available at http://www.sdpc.gov.cn/gzdt/201609/t20160930_821811.html.

18.See Bureau of Price Supervision and Inspection and
Anti-monopoly, Mr. Zhang Handong, Director of the Bureau of Price
Supervision Attended the Launching Ceremony of the Project-
"Study on the Path to the Implementation of FCRS" of the
National Academy of Macroeconomic Research and Gave a Speech,
September 9, 2016, available at: http://www.sdpc.gov.cn/gzdt/201609/t20160909_818118.html.

19.See Bureau of Price Supervision and Inspection and
Anti-monopoly, Bureau of Price Supervision under NDRC and the
German International Cooperation Agency Jointly Organized an
International Seminar on FCRS, September 9, 2016, available at http://www.sdpc.gov.cn/gzdt/201609/t20160909_818121.html.

This seminar addresses the issues founders face when they move beyond their initial partnership and take steps to institutionalize the private equity firm they founded by admitting new general partners.

It's been three years since California kicked off a wave of new pay equity laws around the country. Additional states and municipalities continue to roll out additional requirements, and the Office of Federal Contract Compliance Programs (OFCCP)'s new compensation directive indicates sustained focus from the federal government as well.

In this webinar, members of Orrick's Pay Equity Task Force will share insights from advising clients on some of the most challenging new equal pay issues, as well as litigating pay equity and compensation discrimination claims at the cutting edge of the law.

Under company laws, a company is considered to be a separate legal entity distinct from its holding / parent company. However, the doctrine of ‘piercing the corporate veil' is an exception to the rule ...

2018 saw an evolution of the competition regime based on global best practices with CCI's core focus being on enforcement and deterrence of cartels, promotion of leniency regime and amendment of combination regulations.

What authorities or agencies investigate and enforce the laws governing vertical agreements and dominant firm conduct?

Some comments from our readers…“The articles are extremely timely and highly applicable”“I often find critical information not available elsewhere”“As in-house counsel, Mondaq’s service is of great value”

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.

To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access

No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq

No, please do not send me promotional communications from Mondaq

Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions